INVESTMENT PORTFOLIO ICVC

INVESTMENT PORTFOLIO ICVC ANNUAL LONG REPORT FOR THE YEAR ENDED 31ST OCTOBER 2017

Investment Portfolio ICVC The Company and Head Office Investment Portfolio ICVC 15 Dalkeith Road Edinburgh EH16 5WL Incorporated in Great Britain under registered number IC000690. Authorised and regulated by the Financial Conduct Authority. Authorised Corporate Director (ACD), Alternative Investment Fund Manager (AIFM) and Registrar*~ Scottish Widows Unit Trust Managers Limited Registered Office: Head Office: Charlton Place 15 Dalkeith Road Andover Edinburgh SP10 1RE EH16 5WL Authorised and regulated by the Financial Conduct Authority and a member of The Investment Association. Investment Adviser* Aberdeen Investment Solutions Limited Registered Office: 10 Queen's Terrace Aberdeen AB10 1YG Correspondence Address: 10 Queen's Terrace Aberdeen AB10 1XL Authorised and regulated by the Financial Conduct Authority and a member of The Investment Association. Depositary* State Street Trustees Limited Registered Office: 20 Churchill Place Canary Wharf London E14 5HJ Authorised and regulated by the Financial Conduct Authority. Correspondence Address: Quartermile 3 10 Nightingale Way Edinburgh EH3 9EG Independent Auditors* PricewaterhouseCoopers LLP Level 4, Atria One 144 Morrison Street Edinburgh EH3 8EX *The Company names and addresses form part of the Authorised Corporate Director's Report. ~As at 26th November 2016, the Registrar of the Company changed from The Bank of New York Mellon (International) Limited to Scottish Widows Unit Trust Managers Limited.

Contents Page 2 About the Company* 8 Statement of the Authorised Corporate Director's Responsibilities 8 Report of the Authorised Corporate Director* 9 Statement of Depositary's Responsibilities in respect of the Scheme and Report of the Depositary 10 Independent Auditors' Report 12 Summary of Significant Accounting Policies applicable to all sub-funds Investment Markets Overview*, Portfolio Statement*, Material Portfolio Changes*, Comparative Table and Financial Statements for: 14 Asset Allocator Fund 34 IPS Growth Portfolio 57 IPS Higher Income Portfolio 76 IPS Income Portfolio 97 Managed Growth Fund 2 111 Managed Growth Fund 4 124 Managed Growth Fund 6 137 General Information *Collectively, these comprise the Authorised Corporate Director's Report.

About the Company Welcome to the Annual Long Report for the Investment Portfolio ICVC (the "Company") covering the year ended 31st October 2017 (the "Report"). The Authorised Corporate Director (the "ACD") and Authorised Fund Manager of the Company is Scottish Widows Unit Trust Managers Limited, a private company limited by shares which was incorporated in England and Wales on 19th April 1982. Its ultimate holding company is Lloyds Banking Group plc ("Lloyds"), which is incorporated in Scotland. The Company is an Open-Ended Investment Company ("OEIC") with variable capital, incorporated in Great Britain under registration number IC000690 and is authorised and regulated by the Financial Conduct Authority ("the FCA") under regulation 12 of the Open-Ended Investment Companies Regulations 2001 (SI2001/1228) ("the OEIC Regulations"), with effect from 7th August 2008. Shareholders are not liable for the debts of the Company. The Company is a non-ucits retail scheme which complies with the rules contained in the Financial Conduct Authority's Collective Investment Schemes Sourcebook (the "COLL Sourcebook") and the Investment Funds Sourcebook (the "FUND Sourcebook"). The Company is structured as an umbrella fund, inthat the scheme property of the Company is currently divided among 7 sub-funds, each with different investment objectives. The assets of each sub-fund will be treated as separate from those of every other sub-fund and will be invested in accordance with the investment objective and investment policy applicable to the sub-fund. The investment objective, policies and a review of the investment activities during the six month period are disclosed in the Investment Markets Overview of the individual sub-funds. New sub-funds may be established from time to time by the ACD with the approval of the FCA and Depositary. Each sub-fund would, if it were a separate investment company with variable capital, also be a non-ucits retail scheme which complies with Chapter 5 of the COLL Sourcebook. The assets of each Fund belong exclusively to that sub-fund and shall not be used or made available to discharge (directly or indirectly) the liabilities of, or claims against, any other person or body, including the Company and any other sub-fund and shall not be available for such purpose. Whilst the provisions of the OEIC Regulations provide for segregated liability between Funds, the concept of segregated liability is relatively new. Accordingly, where claims are brought by local creditors in foreign courts or under foreign law contracts, it is not yet known whether a foreign court would give effect to the segregated liability and cross-investments provisions contained in the OEIC Regulations. Therefore, it is not possible to be certain that the assets of a Fund will always be completely insulated from the liabilities of another Fund of the Company in every circumstance. The Financial Statements have been prepared on an individual basis including the 7 sub-funds in existence during the year covered by this Annual Long Report, as permitted by the OEIC Regulations and the COLL Sourcebook. As required by the OEIC Regulations and the COLL Sourcebook, information for each of the 7 sub-funds has also been included. The Report of the Authorised Corporate Director is defined as those items highlighted in the contents page in accordance with paragraph 4.5.9 of the COLL Sourcebook. During the year there have been a number of changes to the Company. These changes are detailed in the section Prospectus changes below. Prospectus changes During the year and up to the date of this report, the following changes were made to the Company and therefore the following changes were reflected in the Prospectus of Investment Portfolio ICVC: With effect from 26th November 2016, the Prospectus of the Company was updated to show that the ACDhas delegated the function of registrar of the Company to Scottish Widows Unit Trust Managers Limited and that all administration functions are delegated to the Scottish Widows Administration Services Limited (with sub-delegation to State Street Bank and Trust Company Limited ("SSBTC")) and Scottish Widows Services Limited. The Bank of New York Mellon (International) Limited no longer carries out any administration or other functions for the Company. The Finance Act 2017 has removed the requirement for fund managers to deduct income tax at source from interest distributions from openended investment companies, authorised unit trusts and investment trust companies. This applies to distributions paid on or after 6th April 2017 and to reflect these changes we have reclassified the net share classes of the Managed Growth Fund 2, IPS Income Portfolio and IPS Higher Income Portfolio to gross share classes. The Instrument and Prospectus of the Company were updated as appropriate to implement these changes on 1st and 3rd February 2017. With effect from 28th April 2017, the provisions of the Prospectus and Instrument of the Company were updated to allow the ACD to effect a compulsory conversion of shares in one class of a sub-fund of the Company for another class of the same sub-fund (the Compulsory Conversion Power). The shareholders of the Company were notified of this matter by way of a letter issued on 30th March 2017. With effect from 2nd May 2017, the Prospectus of the Company was updated for the purpose of removing the note in relation to (i) the reclassification of the net share class of Managed Growth Fund 2 (a sub-fund of the Company) to a gross share class on 3rd February 2017; and (ii) the conversion of the such shares into the pre-existing Class L gross accumulation shares in the Managed Growth Fund 2 on 2nd May 2017. 2

About the Company Prospectus changes With effect from 10th July 2017, the Prospectus of the Company was updated to include: - Insertion of additional information and regulatory disclosures with respect to stocklending and collateral as required by the Securities Financing Transaction Regulation. - Clarification that purchases and redemptions of shares can take place electronically through messaging platforms such as Calastone/EMX where this is available for certain investors (in line with industry practice for institutional investors/platforms). - Updates to list of ACD directors. - Insertion of regulatory disclosure regarding potential conflicts of interest applicable to the Depositary. With effect from 29th September 2017, the Prospectus of the Company was updated to include further insertion of regulatory disclosure regarding any use of government and public securities by the Funds in accordance with the requirements of the FCA Handbook. The Prospectus of the Company has been updated to explain that we will no longer produce short reports twice a year (further information below). A copy of the Prospectus is available on request. Important information Short Reports As part of its Smarter Consumer Communications initiative, the Financial Conduct Authority (FCA) has now removed the requirement for firms such as the ACD to prepare and issue short reports. Investors in the Company will therefore no longer receive short reports and the references to short reports have been removed from the Prospectus of the Company. You can contact us for copies of the interim or annual Long Reports. These are available free of charge and can also be downloaded from our website at www.scottishwidows.co.uk/reportandaccounts Holdings in other Sub-Funds of the Company As at 31st October 2017 there were no shares in sub-funds of the Investment Portfolio ICVC held by other sub-funds of the Company. Remuneration disclosures The Alternative Investment Fund Managers Directive (AIFMD) requires the annual report of an Alternative Investment Fund (AIF) to contain a remuneration disclosure. The requirements include, disclosing the total amount of remuneration paid by the Alternative Investment Fund Manager (AIFM) to its staff for the financial year, split into fixed and variable remuneration. This section provides an analysis of remuneration awards made by Lloyds Banking Group ( the Group ) to its AIFMD Identified Staff for the Group's financial year to 31st December 2016, together with an explanation of the Group s remuneration policies, structure and governance. Quantitative remuneration disclosure Aggregate remuneration paid for the year ended 31st December 2016 to senior management and members of staff whose actions have a material impact on the risk profile of the AIFs (Identified Staff) Other members of staff with Senior management material impact Total Fixed remuneration 1,616,468 2,450,232* 4,066,700 Variable remuneration 958,761 2,175,122* 3,133,883 Carried interest n/a n/a n/a TOTAL 2,575,229 4,625,354* 7,200,583 Number of Identified Staff 7 15* 22 * Excludes colleagues who receive remuneration in respect of their normal professional Group activities only and do not receive any remuneration specifically in relation to AIF/AIFM activities. There are 8 additional colleagues falling into this category. Staff shown in the table above are employed by the Group in relation to activities relating to the management of AIFs/AIFMs and are subject to the Group Remuneration policy. They also perform other Group activities; no staff are directly employed by or receive remuneration from the AIFs/AIFMs. The investment management of the AIFs is carried out by an external fund manager (Aberdeen Asset Investments Limited) and the fees paid for these services are disclosed in the external fund management fees table. Some individuals are subject to more than one regulatory regime, e.g. AIFMD and CRD IV, therefore the enhanced CRD IV regulatory requirements such as clawback apply. 3

About the Company Remuneration disclosures Quantitative AIF/AIFM disclosure The table below shows the total net asset value of all funds the Identified Staff are responsible for, specifically highlighting the proportion of the assets related to the Investment Portfolio ICVC. As at 31st December 2016 the assets under management for all funds were as follows: Net asset value % of total assets Scottish Widows Income and Growth Funds ICVC 11,183,321,414 16.80% Scottish Widows Investment Portfolio ICVC 4,733,493,951 Scottish Widows Investment Solutions Funds ICVC 11,561,757,343 17.37% Scottish Widows Managed Investment Funds ICVC 4,845,386,345 7.28% Scottish Widows Multi-Manager ICVC 5,420,676,320 Scottish Widows Overseas Growth Investment Funds ICVC 2,960,845,468 4.45% Scottish Widows Property Authorised Contractual Scheme 3,499,416,917 5.26% Scottish Widows Tracker and Specialist Investment Funds ICVC 10,956,860,575 16.46% Scottish Widows UK and Income Investment Funds ICVC 11,392,828,749 17.12% 7.11% 8.15% Total: Scottish Widows Unit Trust Managers Limited 66,554,587,082 100.00% External investment adviser fees The table below is a summary of the annual management fees paid to external investment advisers for investment management services, for the year to 31st December 2016, specifically highlighting the proportion of the fees related to the Investment Portfolio ICVC. These fees are paid by Scottish Widows Unit Trust Managers Limited. Annual management fees paid to external investment advisers for the year to 31st December 2016 were: Scottish Widows Investment Solutions Funds ICVC 2,575,618 12.51% Scottish Widows Managed Investment Funds ICVC 3,799,164 18.45% Scottish Widows Multi-Manager ICVC 2,765,037 13.43% Scottish Widows Overseas Growth Investment Funds ICVC 934,897 4.54% Scottish Widows Property Authorised Contractual Scheme 151,947 0.74% Scottish Widows Tracker and Specialist Investment Funds ICVC 402,944 1.96% Scottish Widows UK and Income Investment Funds ICVC 3,043,906 14.78% Fees % of total fees Scottish Widows Income and Growth Funds ICVC 2,970,081 14.42% Scottish Widows Investment Portfolio ICVC 3,946,701 19.17% Total: Scottish Widows Unit Trust Managers Limited 20,590,295 100.00% External investment advisers are subject to BIPRU and as such those of its staff whose professional activities have an impact on the risk profile of the relevant AIF/AIFM are subject to regulatory requirements on remuneration that are equally as effective as those applicable under the AIFMD regime. 4

About the Company Remuneration disclosures Qualitative remuneration disclosure Decision-making process for remuneration policy An essential component of the Group s approach to remuneration is the governance process that underpins it. The Group s remuneration governance arrangements provide clear oversight and effective management of any potential conflicts of interest, ensuring that remuneration decision processes are consistent with the Group s risk appetite. This ensures that the policy is robustly applied and risk is managed appropriately. The overarching purpose of the Remuneration Committee is to consider, agree and recommend to the Board an overall remuneration policy and philosophy for the Group that is defined by, supports and is closely aligned to its long-term business strategy, business objectives, risk appetite and values and recognises the interests of relevant stakeholders. The Group has a conservative business model characterised by a risk culture founded on prudence and accountability. The remuneration policy and philosophy covers the whole Group, but the Committee pays particular attention to the top management population, including the highest paid employees in each division, those colleagues who perform significant influence functions for the Group and those who could have a material impact on the Group s risk profile. The Group has a robust governance framework, with the Remuneration Committee reviewing all compensation decisions for Executive Directors, Senior Management, senior risk and compliance officers, high earners and any other Material Risk Takers (for CRD IV) and Identified Staff (for UCITS/AIFMD and Solvency II). This approach to governance is cascaded through the Group with the Executive Compensation Committee having oversight for all other employees. Divisional Remuneration Committees, which include independent representation from control functions, provide an additional layer of governance. Control function employees themselves are assessed and their remuneration determined by the appropriate Control Function Director, and oversight is provided by a Functional Remuneration Committee. The Group s remuneration policy is based on principles which are applicable to all employees within the Group and in particular the principle that the reward package should support the delivery of our strategic aim to be the best bank for customers whilst delivering long term superior and sustainable returns to shareholders. It fosters a performance-driven and meritocratic culture, encourages effective risk disciplines and is in line with relevant regulations and codes of best practice. The Group places great importance on ensuring that there is a clear link between remuneration and the Group s business strategy. In the implementation of the remuneration policy all conflicts of interest must be avoided. Effective remuneration design and independent oversight of both the policy and outcomes ensures that conflicts of interest are managed and that appropriate links exist between risk and reward. The Remuneration Committee appoints independent consultants to provide advice on specific matters according to their particular expertise. During the year, Deloitte LLP and Kepler, a brand of Mercer advised the Committee. Composition of the Remuneration Committee The members of the Committee during 2016 were Anita Frew (chairman), Lord Blackwell, Alan Dickinson, Dyfrig John (until 11th May 2016), Stuart Sinclair (from 4th January 2016), Anthony Watson and Sara Weller. For further information about meetings and principal matters considered as well as advice to the Committee please refer to the Directors Remuneration Report (http://www.lloydsbankinggroup.com/investors/annual-reports). Role of the relevant stakeholders During 2016, the Committee has consulted extensively with a number of shareholders and key stakeholders, such as the Group s main regulators, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). The Chair of the Remuneration Committee has also met with the Group s recognised unions. Formal consultation on the remuneration of Executive Directors is not undertaken with employees. The Group conducts colleague surveys every six months to measure engagement and culture. The engagement survey includes specific questions relating to reward and discussions on the Group s remuneration approach takes place with union representatives during the annual pay review cycle and on relevant employee reward matters. 5

About the Company Remuneration disclosures Link between pay and performance The Group s approach to reward is intended to provide a clear link between remuneration and delivery of its key strategic objectives, supporting the aim of becoming the best bank for customers, and through that, for shareholders. To this end, the performance management process has been developed, with the close participation of the Group s Risk team, to embed performance measures across the Group s reward structure which are challenging and reflect Group and divisional achievement in addition to personal contribution. The use of a balanced scorecard approach to measure long-term performance enables the Remuneration Committee to assess the performance of the Company and its senior executives in a consistent and performance-driven way. The Group s remuneration policy supports the business values and strategy, based on building long-term relationships with customers and employees and managing the financial consequences of business decisions across the entire economic cycle. The policy is intended to ensure that the Group s remuneration proposition is both cost effective and enables us to attract and retain individuals of the highest calibre, motivating them to perform to the highest standards. The objective is to align individual reward with the Group s performance, the interests of its shareholders, and a prudent approach to risk management. In this way, the requirements of the Group s various stakeholders its customers, shareholders, employees and regulators are balanced. This approach is in line with the Investment Association s principles on remuneration, ESMA guidance on remuneration, the PRA Rulebook and the FCA Remuneration Code, as the policy seeks to reward long-term value creation whilst not encouraging excessive risk-taking. Long-term incentives are based on stretching performance objectives and targets in the Group Balanced Scorecard. This Balanced Scorecard is derived from the five year operating plan which defines the financial and non-financial targets within the agreed risk appetite over a three year period. Annual incentives are based on stretching financial targets and objectives in divisional/functional Balanced Scorecards which are aligned to the Group s strategy. Design and structure of remuneration processes Reward is delivered via a combination of fixed and variable remuneration. Taking into account the expected value of awards, the performance related elements of pay make up a considerable proportion of the total remuneration package for Identified Staff, whilst maintaining an appropriate balance between the fixed and variable elements. The overall policy objective is met by a focus on the particular aspects detailed below. Base salary Identified Staff receive base salaries which are reviewed annually, taking into account individual performance and market information. Fixed share award The fixed share award, made annually, delivers Lloyds Banking Group shares over a period of five years. It ensures that total fixed remuneration is commensurate with the role and provides a competitive reward package, with an appropriate balance of fixed and variable remuneration, in line with regulatory requirements. Annual bonus Identified Staff are eligible to be considered for an annual bonus. The annual bonus plan is designed to reflect specific goals linked to the performance of the business. Awards are based upon individual contribution, overall Group results and divisional/functional Balanced Scorecard ratings. Opportunity is driven by Group performance based on Underlying Profit, together with divisional/functional achievement and individual performance. Stretching objectives relevant to improving overall business performance and aligned with the Group s strategy are contained in Balanced Scorecards and are grouped under the following headings: Customer, People, Control Environment, Building the Business and Finance. The Remuneration Committee reviewed performance in depth to determine ratings for the Group and each division, including consideration of risk matters arising in 2016. The overall rating for the Group was Strong plus. Collective performance adjustment consideration was given to items not factored into the Group Underlying Profit or divisional/functional Balanced Scorecards. These included the provisions for legacy conduct-related matters relevant to the year. As a result of these items, the Remuneration Committee approved an overall adjustment of approximately 19 per cent, resulting in a final bonus outcome of 392.9 million. To ensure fairness for our shareholders, the total bonus outcome is subject to a limit of 10 per cent of pre-bonus underlying profit. For 2016, the bonus outcome of 392.9 million is significantly below the limit of 10 per cent of underlying profit. 6

About the Company Remuneration disclosures Deferral, vesting and performance adjustment To ensure that the interests of Lloyds Banking Group and its employees are aligned with those of the shareholders, and that the approach to risk management supports the interests of all stakeholders, a proportion of bonus above certain thresholds is deferred into Lloyds Banking Group Shares. For all Identified Staff, bonus is deferred in line with the regulatory requirements. This deferred amount is subject to performance adjustment (malus) in accordance with the Group s Deferral and Performance Adjustment Policy. The application of performance adjustment will generally be considered when: - there is reasonable evidence of employee misbehaviour, misconduct or material error or that they participated in conduct which resulted in losses for the Group or failed to meet appropriate standards of fitness and propriety; - there is material failure of risk management at a Group, business area, division and/or business unit level; - the Remuneration Committee determines that the financial results for a given year do not support the level of variable remuneration awarded; and/or - any other circumstances where the Remuneration Committee or a Division or Function Remuneration Committee acting on their behalf considers adjustments should be made. The Remuneration Committee reserves the right to exercise its discretion in reducing any payment that otherwise would have been earned, if they deem this appropriate. For Identified Staff who are also Material Risk Takers under CRD IV vested variable remuneration can be recovered up to seven years after the date of award in the case of a material or severe risk event (clawback). This period may be extended to ten years where there is an ongoing internal or regulatory investigation. The option is used alongside other performance adjustment processes. Long-term incentives From 2017, the long-term incentive plan will be known as the Group Ownership Share plan. It is a core part of the reward strategy and an important tool for aligning the Group s reward strategy to the performance of the business. Through the application of carefully considered, stretching target measures, the Group can ensure that awards are forfeited or restricted where performance does not meet the desired level. This directly connects the financial reward for the executive and senior management team with the growth and prosperity of the Group and motivates them to demonstrate appropriate behaviours across all areas of the business. The Group Ownership Share plan pays out in shares based on performance against Group financial and other non-financial strategic targets over a three year period. Group Ownership Share plan awards are subject to malus and clawback as outlined in the previous section. Group Ownership Share plan performance measures During 2016 the Remuneration Committee consulted widely with various shareholders on the topic of performance measures and sharing the growth in the Group appropriately between shareholders and management. The awards made in 2017 are based on the Group s performance against the following key measures: Economic Profit (25%), Total Shareholder Return (30%), Cost: Income ratio (10%) and strategic measures (35%). Any shares released are subject to a further holding period in line with regulatory or market practice. Governance and risk management In addition to setting the overall remuneration policy and philosophy for the Group, the Remuneration Committee ensures that colleagues who could have a material impact on the Group s risk profile are provided with appropriate incentives and reward to encourage them to enhance the performance of the Group and that they are recognised for their individual contribution to the success of the organisation, whilst ensuring that there is no reward for excessive risk taking. The Remuneration Committee works closely with the Risk Committee in ensuring the bonus outcome is moderated. The two Committees determine whether the proposed bonus outcome and performance assessments adequately reflect the risk appetite and framework of the Group; whether it took account of current and future risks; and whether any further adjustment is required or merited. The Group and the Remuneration Committee are determined to ensure that the aggregate of the variable remuneration for all colleagues is appropriate and balanced with the interests of shareholders and all other stakeholders. The Remuneration Committee s terms of reference are available from the Company Secretary and are also displayed on the Group s website, www.lloydsbankinggroup.com. These terms are reviewed each year to ensure continued compliance with the remuneration regulations. 7

Statement of the Authorised Corporate Director's Responsibilities The Financial Conduct Authority Collective Investment Schemes Sourcebook (the "COLL Sourcebook") requires the Authorised Corporate Director ("ACD") to prepare Financial Statements for each accounting period which give a true and fair view in accordance with United Kingdom Generally Accepted Accounting Practice of the financial affairs of the Company and of its net revenue and the net capital gains/(losses) for the year. In preparing the Financial Statements the ACD is required to: comply with the Prospectus, the Statement of Recommended Practice (IMA SORP) for Financial Statements of Authorised Funds issued in May 2014, the Instrument of Incorporation, United Kingdom Generally Accepted Accounting Practice and applicable accounting standards; select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; and prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in operation. The ACD is required to keep proper accounting records and to manage the Company in accordance with the COLL Sourcebook, the Instrument of Incorporation and the Prospectus. The ACD is responsible for taking reasonable steps for the prevention and detection of fraud and other irregularities. The ACD is responsible for ensuring that, to the best of their knowledge and belief, there is no relevant audit information of which the auditors are unaware. It is the responsibility of the ACD to take all necessary steps as a director to familiarise themselves with any relevant audit information and to establish that the auditors are aware of that information. The ACD is also responsible for the maintenance and integrity of the website on which the financial statements and auditors report are published and distributed electronically. Please note that legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Report of the Authorised Corporate Director In accordance with the requirements of the COLL Sourcebook as issued and amended by the Financial Conduct Authority, I hereby certify the Report on behalf of Scottish Widows Unit Trust Managers Limited, the Authorised Corporate Director. Sean Lowther Director Scottish Widows Unit Trust Managers Limited 19th February 2018 8

Statement of Depositary's Responsibilities in respect of the Scheme and Report of the Depositary to the Shareholders of the Investment Portfolio ICVC The Depositary must ensure that the Company is managed in accordance with the Financial Conduct Authority s Collective Investment Schemes Sourcebook and the Investment Funds Sourcebook, the Open-Ended Investment Companies Regulations 2001 (SI 2001/1228), as amended, the Financial Services and Markets Act 2000, as amended, (together the Regulations ), the Company s Instrument of Incorporation and Prospectus (together the Scheme documents ) as detailed below. The Depositary must in the context of its role act honestly, fairly, professionally, independently and in the interests of the Company and its investors. The Depositary is responsible for the safekeeping of all custodial assets and maintaining a record of all other assets of the Company in accordance with the Regulations. The Depositary must ensure that: the Company s cash flows are properly monitored and that cash of the Company is booked into the cash accounts; the sale, issue, repurchase, redemption and cancellation of shares are carried out; the value of shares of the Company are calculated; any consideration relating to transactions in the Company s assets is remitted to the Company within the usual time limits; the Company s income is applied in accordance with the Regulations; and the instructions of the Alternative Investment Fund Manager ( the AIFM ) are carried out (unless they conflict with the Regulations). The Depositary also has a duty to take reasonable care to ensure that Company is managed in accordance with the Scheme documents and the Regulations in relation to the investment and borrowing powers applicable to the Company. Having carried out such procedures as we consider necessary to discharge our responsibilities as Depositary of the Company, it is our opinion, based on the information available to us and the explanations provided, that in all material respects the Company, acting through the AIFM: (i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Company s shares and the application of the Company s income in accordance with the Regulations, the Scheme documents of the Company, and (ii) has observed the investment and borrowing powers and restrictions applicable to the Company. State Street Trustees Limited 19th February 2018 9

Independent Auditors' Report to the Shareholders of Investment Portfolio ICVC ("the Company") Report on the audit of the financial statements Opinion In our opinion, Investment Portfolio ICVC's financial statements: give a true and fair view of the financial position of the Company and each of the sub-funds as at 31st October 2017 and of the net capital gains/(losses) on the scheme property of the Company and each of the sub-funds for the year then ended; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, and applicable law), the Statement of Recommended Practice for UK Authorised Funds, the Collective Investment Schemes sourcebook and the Instrument of Incorporation. Investment Portfolio ICVC (the company ) is an Open Ended Investment Company ( OEIC ) with seven sub-funds. The financial statements of the company comprise the financial statements of each of the sub-funds. We have audited the financial statements, included within the Annual Long Report (the Annual Report ), which comprise: the balance sheets as at 31st October 2017; the statement of total return and the statement of change in net assets attributable to shareholders for the year then ended; the distribution tables; the accounting policies; and the notes to the financial statements, which include a description of the significant accounting policies. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) ( ISAs (UK) ) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when: the Authorised Corporate Directors use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or the Authorised Corporate Director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company s or any of the sub-funds ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company s or any of the subfunds ability to continue as a going concern. Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors report thereon. The Authorised Corporate Director is responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. Authorised Corporate Director s Report In our opinion, the information given in the Authorised Corporate Director s Report for the financial year for which the financial statements are prepared is consistent with the financial statements. 10

Independent Auditors' Report to the Shareholders of Investment Portfolio ICVC ("the Company") Responsibilities for the financial statements and the audit Responsibilities of the Authorised Corporate Director for the financial statements As explained more fully in the Authorised Corporate Director s Responsibilities Statement set out on page 8, the Authorised Corporate Director is responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Authorised Corporate Director is also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Authorised Corporate Director is responsible for assessing the company s and each of the sub-funds ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Authorised Corporate Director either intends to wind up or terminate the company or individual sub-fund, or has no realistic alternative but to do so. Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors report. Use of this report This report, including the opinions, has been prepared for and only for the Company s shareholders as a body in accordance with paragraph 4.5.12 of the Collective Investment Schemes sourcebook as required by paragraph 67(2) of the Open-Ended Investment Companies Regulations 2001 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Other required reporting Opinion on matter required by the Collective Investment Schemes sourcebook In our opinion, we have obtained all the information and explanations we consider necessary for the purposes of the audit. Collective Investment Schemes sourcebook exception reporting Under the Collective Investment Schemes sourcebook we are also required to report to you if, in our opinion: proper accounting records have not been kept; or the financial statements are not in agreement with the accounting records. We have no exceptions to report arising from this responsibility. PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Edinburgh 19th February 2018 11

Summary of Significant Accounting Policies applicable to all sub-funds 1. Accounting basis and distribution policies (a) Basis of accounting The financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with applicable law, FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, and the Statement of Recommended Practice (SORP) for UK Authorised Funds issued by the Investment Management Association (IMA) in May 2014. The Fund early adopted the FRS102 update made in March 2016, relating to the fair value hierarchy classifications. (b) Revenue Interest on deposits are recognised as earned. Revenue from debt securities is accounted for on an effective yield basis. Revenue from other authorised collective investment schemes is recognised when the investments are quoted ex-dividend. Where accumulation units or shares are held in another authorised collective investment scheme, the accumulation of revenue relating to the holding is recognised in the revenue account including any withholding taxes but excluding tax credits. Equalisation on distributions received is deducted from the cost of the investment. Revenue is allocated when earned in the proportion of the Net Asset Value of each share class to the total Net Asset Value of the sub-fund. (c) Expenses The underlying sub-funds may currently have up to five share classes; Class A, Class L, Class P, Class Q and Class X. Each share class suffers a different Authorised Corporate Director ("ACD") fee. Consequently the level of expenses attributable to each share class will differ. All expenses other than those relating to the purchase and sale of investments are included in expenses in the Statement of Total Return. The only exception is interest on borrowing which is included in interest payable and similar charges in the Statement of Total Return. The ACD s annual fee is charged to the revenue property of the respective sub-funds. Rebates are applied where ACD's fees are incurred by the underlying investments. Internal management fee rebates (rebates from Lloyds Banking Group companies) are offset against the ACD's periodic charge. Where it is the policy of the underlying investment to charge its management fees to capital in determining its distribution, the Fund recognises such management rebates as capital within note 2 Net capital gains/(losses) on an accruals basis. Otherwise the rebate is recognised as revenue on an accruals basis within note 3 revenue, or note 4 expenses if internal, and forms part of the distribution. Expenses incurred in respect of, or attributable to, the sub-funds as a whole are allocated when incurred in the proportion of the Net Asset Value of each share class to the total Net Asset Value of the sub-fund. (d) Distribution policy The revenue from the sub-funds' investments accumulates during each accounting period. If revenue exceeds expenses during the period, the net revenue of the sub-funds is available for distribution (or re-investment) at share class level to the shareholders in accordance with the OEIC Regulations. If expenses exceed revenue during the period, the net revenue shortfall may be funded from capital. It is the policy of the following sub-funds to make interest distributions: IPS Higher Income Portfolio, IPS Income Portfolio and Managed Growth Fund 2. All other sub-funds make dividend distributions. (e) Under the IMA SORP 2014 section 3.71, it is now acceptable not to take into account marginal tax relief in determining the distribution. Taxation Provision is made for corporation tax at the current rate on the excess of taxable income over allowable expenses. UK dividend revenue is disclosed net of any related tax credit. Overseas dividends continue to be disclosed gross of any foreign tax suffered, the tax element being separately disclosed in the taxation note. Deferred taxation is provided on all timing differences that have originated but not reversed by the Balance Sheet date other than those differences regarded as permanent. Any liability to deferred tax is provided at the average rate of tax expected to apply. Deferred tax assets and liabilities are not discounted to reflect the time value of money. Deferred tax assets are only recognised to the extent that it is regarded more likely than not that there will be taxable profits against which the reversal of underlying timing differences can be offset. 12

Summary of Significant Accounting Policies applicable to all sub-funds (k) 1. Accounting basis and distribution policies (f) Valuation of investments The listed investments of the Company have been valued at market value on 31st October 2017 at (GMT) 12:00pm, excluding any accrued interest in the case of fixed interest securities. Market value is defined by the SORP as fair value, which is generally the bid value of each security. Where applicable, illiquid, unlisted, delisted, unapproved or suspended securities are based on the ACD s assessment of their net realisable value. Open forward currency contracts are shown in the Portfolio Statement and are valued using contracted forward rates. The net gains/(losses) are reflected in "Forward currency contracts" in Net capital gains/(losses). Open Futures Contracts are shown in the Portfolio Statement and are valued at their fair value as at balance sheet date. The fair value of long positions is the quoted bid price and fair value of short positions is the quoted offer price. The net gains/(losses) are reflected in "Future and option contracts" in Net capital gains/(losses). For debt security investments where no independent price is readily available, an internal model price methodology is used. Credit spreads are often used as inputs into fair value modelling. A review of all illiquid assets and prices obtained or calculated is conducted by the Investment Adviser on a monthly basis. Unquoted debt securities In order to ensure that a fair value is recognised for unquoted or illiquid debt securities, there are primary, secondary and tertiary price sources in the first instance and an independent broker will be used if necessary. The primary, secondary and tertiary price sources are regularly compared with one another to ensure accuracy. A formal review is then carried out by the ACD which challenges the external valuation and includes consideration of the impact of any relevant movements in underlying variables such as: underlying movements in the relevant markets, for example credit spreads; how current transactions are being priced in the market; how the security is structured; and any supporting quantitative analysis as appropriate, for example with reference to Bloomberg or internal models. Investments in other collective investment schemes have been valued at bid price for dual priced funds and at the single price for single priced funds. (g) Exchange rates All transactions in foreign currencies are translated into Sterling at the rate of exchange ruling on the date of such transactions. Foreign currency assets and liabilities at the end of the accounting year are translated at the exchange rates applicable at the end of the accounting year at the appropriate valuation point. (h) Dilution adjustment In certain circumstances (as detailed in the Prospectus) the ACD may charge a dilution adjustment on the creation or cancellation of shares, which is paid into the capital of the relevant sub-fund on an accruals basis. The adjustment is intended to cover certain dealing charges not included in the mid-market value of the sub-fund used in calculating the share price, which could have a diluting effect on the sub-fund. (i) Equalisation Equalisation only applies to shares purchased during the distribution period (group 2 shares). It is the average amount of revenue included in the purchase price of all group 2 shares and is refunded to holders of these shares as a return of capital. Being capital, it is not liable to income tax but must be deducted from the cost of the shares for capital gains tax purposes. (j) Derivatives Some of the sub-funds may enter into permitted transactions such as derivative contracts or forward currency contracts. Where these transactions are used to protect or enhance revenue, the revenue and expenses are included within net revenue in the Statement of Total Return. Where the transactions are used to protect or enhance investments, the gains/losses are treated as capital and included within gains/losses on investments in the Statement of Total Return. Any open positions in these types of transactions at the year end are included in the Balance Sheet at their mark to market value. Securities Financing Transactions Please note there have been no Securities Financing Transactions, therefore no Securities Financing Transactions note is presented. 13